Archives for 11 May 2015

All debt is the same right? Not exactly, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa. “Very often consumers seem to put all debt in the same category, however while all debt is debt, it is not all equal. Identifying the difference between bad debt and what could be considered as potentially good debt will assist consumers to make more informed and better financial decisions moving forward,” says Goslett.
Before the global property market downturn, many homeowners would turn to their home equity as a credit source when they required large sums of money. However, post-recession thinking is somewhat different with homeowners rather paying down their homeloan accounts as much as possible to ensure that they see a greater return on their investment should they decide to sell. As a result a popular alternative would be for consumers to dip into their retirement funds and take portions of this money in cash when needed. Unfortunately, taking money out of retirement investments will only cost the consumer in the long run and have a detrimental impact on their retirement income.
Goslett says that instead of getting to the point of resorting to taking away from a retirement fund, it is important to understand the nature of the debt and see whether it will put the consumer in a better or worse positon then they are currently in. “It is extremely important for a consumer to make the distinction between a good debt, a necessary debt and a bad one, as this will help to drive their decision-making process.”
He adds that the determining factor between a good and bad debt is that a good debt will result in the consumer’s financial value growing over time. “A prime example of this is a bond, which results in the consumer owning an asset – a home. The property not only serves the consumer’s need for shelter, but also appreciates in value and grows the consumer’s net worth over time,” says Goslett. “Something to consider however, is that a loan can tip over into becoming a bad debt if the homeowner becomes financially distressed and can no longer afford their property. This emphasises the importance of having a financial contingency plan in place when purchasing a home.”
A necessary debt would be something that would change the consumer’s station in life, such as a student loan. In order to fund their education, most students will … [Read more...]

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Into the Sunlight
Image by blavandmaster
View from Glacis-bridge in Minden southbound upstream river Weser. On the right the river mill, in the background the Jakobsberg left and the Kaiser Wilhelm Monument on the right.
The beautiful sunshine as well as the bad weather forecast for Sunday encouraged us to have a walk along the river Weser between Bad Oeynhausen and Minden. It felt like spring, nature is catching up.
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